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Bonds

Investors looking for a predictable and steady returns should definitely invest in bonds.As an investor, if you're saving for a comfortable retirement or your children's future, bonds are a steady way of achieving these financial objectives.

How to choose?

How to choose a Bond?

A bond is a financial Instrument issued by a company when you lend a sum of money to the company for a specified period of time. In return, the company pays you a certain rate of interest, which is disbursed in the form of regular fixed payouts. While similar to company fixed deposits, bonds are transferable and can be secured.

The important thing with bonds is to choose the company that you are investing in wisely. Here are some factors to keep in mind when investing in bonds:

Reputation & Rating: Invest in a company with a good reputation and a good credit rating (given by industry-recognised rating agencies like CRISIL, ICRA)

Diversification: If you are investing in more than one bond, invest in different companies operating in different industries.

Saleability: If a bond is listed, you may be able to sell in the market for a higher price. If not, your money will remain invested until the bond matures.

​Why invest?

​​Why invest in Bonds?

Bonds give regular fixed income with higher interest rates than fixed deposits, postal savings and other similar investments. Its easier to recover money than fixed deposits if the bonds are listed and can be sold in the market Also Bonds have potential for capital appreciation.

Bonds that we distribute

Bonds that we distribute

We can assist you in Investments in Bonds issues by any one of the following issuers:

Tata Steel

TATA Power

NABARD

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Various types of Bonds

Various types of Bonds

Government bonds:

These kinds of bonds are issued and backed by the Government of India. In other words, the Indian government offers investors bonds at a fixed rate. The government also employs an investment banker, whose main responsibility is to serve as a middleman. However, it is difficult for retail individuals to invest directly in these bonds as the minimum investment amount is very high.

Corporate bonds:

These bonds are offered by corporate houses and are open to everyone. However, these bonds are not as safe as government bonds as the issuing companies are subject to market volatility, industry ups and downs, etc.

Zero coupon bonds:

Usually, most types of bonds are offered at a fixed interest rate. However, zero coupon bonds do not come with any specific coupon rate or interest rate. They are offered at a discount on the face value, and on maturity, investors get the face value back. The difference between the two is the profit.

Junk bonds:

These bonds are issued by companies that are financially not very stable. These bonds are considered below the investment grade. Since it is a risky trade for an investor to put money in such bonds, the issuing company usually offers a high rate of return.

Tax-saving bonds:

By investing in this type of bond, you receive exemption from paying taxes on the interest income as long as you hold the bond or until its period of maturity.

While there are many other types of bonds available in the market, the ones mentioned above are some of the most common ones in India.

​​Ways to Invest

​​Ways to Invest in Bonds

Usually, the company issuing bonds will initially offer the bonds to the public or only to large, institutional investors. If the bonds are listed and open to the public, you will be able to buy these bonds directly from the company or through the markets.

Bonds can be purchased through your online trading accounts also.

But really, the easiest way to invest in bonds would be to call Reliance Money Solutions. We would be happy to help you.

Example

​Example of Bonds Investment

Ms. Venkat's Bond Investment

Ms. Venkat had wanted regular income from her investment.She bought a bond with a face value of Rs.10,000 at a coupon of 8% and a maturity of 10 years. This means she wi'll receive a total of Rs.800 (Rs10,000*8%) of interest per year for the next 10 years. Assuming bond pay interest semi-annually, she will receive two payments of Rs.400 a year for 10 years. When the bond matures after a decade, she will get her Rs.10,000 back.

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